Board matters

As a financial institution bridled with public interest, qualifications for membership in our Board of Directors are dictated by our By-Laws, the Corporation Code and the relevant regulations issued by the Bangko Sentral ng Pilipinas (“BSP”) and the Securities Exchange Commission (“SEC”). Likewise, as a publicly listed company, special care is taken to ensure that the Board’s composition and directors’ qualifications meet the applicable Philippine Stock Exchange (“PSE”) governance regulations, requirements and standards.

Composition. Our 2024 Board consists of 15 directors. Fourteen of these 15 directors are non-executive officers of the Bank, and the one executive director is the Bank's President and CEO. The size of our Board is considered to be appropriate given the complexity of the Bank’s and group operations, the geographical spread of our business and the significant time demands placed on the directors.

Qualification. Our directors are business and civic professionals of significant stature, with a track record of accomplishment in their own right, often independent of our Bank. They deliver a broad range of experience and expertise on subject matters relevant to the governance of present-day universal banking institutions. All members of the Board have met the stringent qualifications of the BSP for directors of a universal bank as well as the requisites of the SEC for directors of a publicly-listed company.

Diversity

Our overriding duty is to maintain a strong, effective board with strong, effective directors in order to create and maintain an atmosphere of constructive challenge and debate. This requires the right balance of expertise, skills, experience and perspectives. Our board, therefore, recognizes and embraces the benefits of having diversity. The Board Diversity Policy, adopted by the board in 2015, sees increasing diversity at board level as an essential element in maintaining sound corporate governance, realizing sustainable and balanced development and achieving strategic objectives.

In this respect, board diversity is considered from varied aspects when designing the board’s composition including but not limited to gender, age, cultural and educational background, geographical location, professional experience, skills, knowledge, and length of service of directors, and other regulatory requirements, etc.

Our leadership model ensures an appropriate balance of power, accountability, and independence in decision-making.

Skills and Experience

The business of banking is not simply a game of numbers, loan and deposit volumes, and money transactions. It is the business of building trust and continually winning that trust even as customer needs and preferences, the industry, products and services, and the regulatory regime seem to evolve overnight. Only a skillfully put together, diverse, and well-composed Board can accomplish the challenge of marrying this underlying sense of purpose with the passion and bias to action needed to move towards that vision.

Apart from the President and CEO, BPI has former bank CEOs on its Board who not only collectively provide a wealth of technical, banking, and risk management experience but, more importantly, also embody prudent judgment and integrity characterized by sound decision-making and professionalism. As bank CEOs, they are also hardwired to understand what matters in the business and driven to build strategies to win that trust. (Recommendation 1.1, SEC CG Code for PLCs)

Our Board also includes directors of publicly-listed companies who are business leaders at the helm of the country’s top companies and conglomerates. Unchallenged in their depth of understanding and appreciation of what the Bank needs to do to continue its over 170-year legacy as the principal architect of the country’s financial inclusion landscape, they also safeguard its listed status, protect shareholder rights, and strengthen investor relations.

The BPI Board counts among its members astute professionals who can best assess and evaluate the risk and control policies, processes, and systems of the Bank. Including the former bank CEOs and directors with regulatory experience, more than half of the members of the Board are equipped with specialist and generalist experience, training, and education to guide the most critical functions in the Bank.

Last but not least, a healthy respect and cautious, heedful, and constructive regulatory perspective is also brought onboard by a number of directors, with grounding in crafting regulations for banking supervision, oversight for examination of BSP-supervised entities, or extensive policy experience in financial markets, international finance and monetary policy.

Age Diversity

The Board recognizes that age diversity is an important factor to achieving diversity of thought. Its experienced directors bring to the Board the benefit of having seen several business cycles and thus provide unique perspective and insight. The Board also values having younger directors, who may be better attuned to the rapidly evolving environment, particularly when it comes to disruption and digitalization of financial services.

Gender Diversity

 The Board also strives to ensure that there is appropriate representation of women, and female Independent Directors. (Recommendation 1.4 of SEC CG Code for PLCs).

ESG Involvement

 The BPI Board ensures that there is a balanced distribution, among its members, of directors with skills, work experience, background and current involvement, knowledge and understanding of key ESG issues, and preferences of stakeholders.

The full Board Diversity Policy may be read here.

Measurable Diversity Objectives or Targets

Best practice under the SEC Code of Corporate Governance for Publicly-Listed Companies recommends the establishment of measurable objectives or targets for achieving board diversity. In this respect, the following are the Board’s diversity goals, considered as rolling targets over a 5-year period, that, together with the Board Skills and Expertise Matrix, are reviewed annually and updated as needed:

1. Number of Female Directors on the Board: At least 2
2. Target Number of Independent Directors on the Board: At least 5
3. At least 1 director with knowledge of IT systems and technology governance in the financial services industry.
4. At least 1 director with marketing and customer management expertise.

Progress towards the diversity goals. One or more of the following activities are conducted as part of the regular succession planning and annual board refresh exercises:

• Increasing the number of female candidates to be considered for the shortlist of nominees for the election of the board of directors at the annual stockholders’ meeting.
• Conduct of a regular review of list of retired bank employees for consideration of directorship positions within parent, subsidiaries and affiliates.
• Close coordination within Ayala Group of Companies for information on and shortlisting of independent candidates.
• Liaison and relationship development with regulators for information on possible candidates for directorship.
• Use of professional search firms/industry databases and associations to shortlist candidates.

Independence

BPI's board operates with significant independence from its management. Our 2024 board currently has six directors classified as independent or having no interest or relationship with BPI at time of election, appointment, or re-election, subject to confirmation by the BSP Monetary Board and other regulatory confirmation and/or approvals as may be required. Fourteen of the 15-member board, are non-executive directors of the bank who are not part of the day-to-day management of banking operations. Currently, the one executive director is the bank's President and CEO. Historically, our Chairman has also been a non-executive director and is separately appointed from our President and Chief Executive Officer.

At the Organizational Meeting of the Board of Directors following the 2024 Annual Stockholders Meeting, the Board also appointed independent member Rizalina G. Mantaring as Lead Independent Director.

As a PLC, BPI not only conforms to the regulatory requirement to have at least one-third (1/3) but not less than two (2) members of its board of directors who shall be independent directors; it, in fact, surpasses it.

The presence of a significant number of independent directors on our Board is key to fairness and integrity, allowing the Board to strike a balance between public, corporate and all stakeholder interests.

Profiles of the Bank's Board of Directors may be read here.

Under BSP Circular 969 “Enhanced Corporate Governance Guidelines for BSP Supervised Financial Institutions”, amending Section X142.4.b. of the MORB, on the qualifications of the Chairperson of the Board of Directors, the Board of Directors shall define the responsibilities of the Lead Independent Director, which shall be documented in the corporate governance manual. The Board of Directors shall ensure that the Lead Independent Director functions in an environment that allows him to effectively challenge the CEO as circumstances may warrant. The Lead Independent Director shall also perform a more enhanced function over the other independent directors and shall: (1) lead the independent directors at board of directors meetings in raising queries and pursuing matters; and (2) lead meetings of independent directors, without the presence of the executive directors.

Accordingly, on May 7, 2018, the BPI Board approved the amendment to the Manual on Corporate Governance providing for the designation of a Lead Independent Director role in the Board. In the Organizational Meeting of the Board of Directors, following the 2024 Annual Stockholders Meeting, the Board appointed independent member Rizalina G. Mantaring as Lead Independent Director.

The full biography of Lead Independent Director Rizalina G Mantaring may be viewed here.

Policy on Directorships. BPI directors are bound by the Board of Director’s Code of Conduct to consider their individual circumstances and the nature, scale and complexity of the Bank’s activities in showing their full commitment. In this respect, the Board policy on directorships stated in the Manual on Corporate Governance currently does not set a limit on number of directorships with the exception of the regulatory limits for Non-Executive Directors in Publicly Listed Companies.

Directorships in Publicly-Listed Companies. The Bank applies the regulatory limit of five (5) on directorships of Non-Executive Directors in publicly-listed companies and within conglomerates. In applying this provision to directorships in entities within a conglomerate, each publicly-listed company where the Non-Executive Director concurrently serves as director shall be separately considered or assessed.

Application of these policies on directorships shall not impinge on or violate a shareholder’s ownership rights and legal right to vote and be voted upon as directors.

Governance

Our board exercises its authority consistent with its By-Laws, the bank’s Corporate Governance Manual, and relevant rules, regulations and laws provided under the Corporation Code and prescribed by the SEC and BSP. These provide the framework for the conduct of the board's business, through meetings of the board and its committees.

Items placed on the board agenda are those with the most fundamental importance and broad policy implications for the bank. Directors are free to suggest items for inclusion, and to raise at any board meeting subjects not on the agenda. At the chairman’s discretion, any agenda items may also be referred for discussion in the respective committees.

The chairman presides over meetings of the board. In his absence, the vice chair presides. Board and committee meetings are conducted consistent with the bank’s By-Laws and Robert’s Rules of Order. The Corporate Secretary rules on all disputed questions of procedure. Discussions are open, and independent views are given due consideration. Board materials are made available to directors at least five (5) business days in advance of the scheduled meeting.

Quorum

Two-thirds (2/3) of the members of the Board of Directors shall constitute a quorum at any meeting for the transaction of corporate business, and every decision of a majority of the quorum duly assembled as a board shall be valid as a corporate act, unless otherwise provided in the By-laws, and except for the election of officers, which shall require the majority of all directors.

Meetings

Our board meets as often as needed. Currently, regular board meetings are convened in accordance with a monthly cycle, and special meetings may be called as needed. Board of Director’s meetings are scheduled at the beginning of the year, immediately after the annual stockholders meeting, to cover the full term of the newly elected or re-elected members of the Board, reckoned from the date of the current year’s annual stockholders’ meeting to that of the following year.

Monthly Board of Directors meetings are usually set on the third Wednesday of the month unless reset due to holidays. The independent and non-executive directors of the bank also meet at least once a year without the presence of any executive director and/or management.

Attendance

In 2023, average attendance of elected Directors of the Board’s fourteen meetings was 99%. When exigencies prevent a Director from physically attending a Board or board committee meeting, facilities for telephone conferencing are made available. In instances when a Director is unable to attend meetings even through teleconferencing due to prior commitments or unavoidable events, the said Director provides input to the chairman so that his views can be known and considered.

Our Board of Directors has adopted a Code of Conduct (the “Director’s Code”) which applies to and is binding on all directors of the Bank. The Director’s Code is intended to provide guidance to directors, whether executive, non-executive or independent, with policies on standards for conduct of the business of the Bank, the protection of the rights of the Bank and of its stakeholders, maintaining BPI’s reputation for integrity and fostering compliance with laws and regulations applicable to the Bank and its Directors.

Access to Information

The Board needs to have the right information at the right time, so that it can engage deeply on how the business is operating, how the executive team is performing and provide the proper check and balance. The Board has separate and independent access to the Corporate Secretary, who also serves as adviser to the directors on their responsibilities and obligations and oversees the adequate flow of information to the Board prior to meetings. To provide directors with all the information and assistance necessary to prepare for meetings or obtain clarification for any relevant matters, this access to the Corporate Secretary is unhampered, unlimited, and direct.

Our management also ensures adequate flow of information to the Board. This information may include the background or explanatory information relating to matters to be brought before the Board, copies of disclosure statements and related documents, budgets, forecasts and monthly internal financial statements. In this respect, all directors also have access to advice from senior management including C-Suite officers such as the Chief Financial Officer, Chief Audit Executive, Chief Risk Officer, and Chief Compliance Officer.

All directors and board committees also have unrestricted access to company records and information in addition to receipt of regular detailed financial and operational reports from senior management.

External Advice

Considering the increasing complexity of market transactions and rapid rate of change in the regulatory sphere, our board, if so requested by the Chairman or other directors, can call on external specialists or consultants for advice, briefings or assistance on specialized areas of focus such as related party transactions, mergers and acquisitions, valuation, etc. Management can arrange for the internal auditor, management services company or consultants to present to the bank.

Along with the demand for greater disclosure and transparency, corporate boards continue to face ever more complex oversight challenges. Through relevant and continuing training, our directors gain a robust understanding of the business of banking, keep abreast with current issues and regulatory changes, and strengthen their ability to meet these governance responsibilities.

Induction of New Directors

Our board, together with the Corporate Secretary, ensures that there is a deliberate, systematic and rapid familiarization of new directors with the board's organization and operations. New directors are apprised of the bank’s governance framework, Manual on Corporate Governance and Code of Conduct, board operations, and the availability of information and support from the Corporate Secretary and senior management. The formal induction program is tailored to a director’s needs, skills, experience and background. Basic to the program, however, are the board’s philosophy and vision for the bank, as well as the board’s culture and operating style. The induction process also tests the capability and dynamics of the newly reconstituted boardroom team by giving the board, as a whole, an opportunity to review its assumptions and positions on key issues and processes.

New directors are also briefed on the bank’s background, Table of Organization, and, in compliance with BSP Cir. No. 969, the general and specific duties and responsibilities of the board. They are also informed of relevant polices and rules governing their roles as directors, and given an overview of the industry, regulatory environment, business of banking and annual and medium-term strategic plans of the bank, as needed as well as any current issues affecting the bank or the industry. This includes regulatory initiatives on Anti-Money Laundering & Terrorist Financing Prevention Program, Foreign Account Tax Compliance Act (“FATCA”), Basel III, Securities Regulations Code and new BIR regulations. Finally, we also arrange that all directors annually undergo the requisite corporate governance seminar as provided by an SEC or BSP-accredited institution.

Director Education

Through its various units, the Bank provides continuing Director Education on current developments, such as FATCA, Basel III, and new BIR regulations. Other in-bank courses available to senior managementl include briefings, seminars and courses on:

• Cyber risk and Cyber security
  
• Data Privacy and Protection
  
• Anti-money laundering
  
• Business continuity management
  
• Conflict of interest
  
• Risk Management Overview
  
• Information Security Awareness

BPI also conducts two courses in partnership with Harvard Business School: the Advance Management Program and the Leadership Excellence Acceleration Program.

Board members also regularly attend governance forums, conferences and summits organized in partnership with the Institute of Corporate Directors such as the Ayala Group Integrated Corporate Governance, Risk Management, and Sustainability Summit 2023.